Punch Taverns Share Discussion Threads

[wakeland] 07/2/2013 10:21

Might work out, the government are desperately trying to inflate house prices again in reddiness for the next election and rising property prices can be no bad thing for this company.

[bigboyo] 07/2/2013 10:13

britishb,

How awfully smart of you !

[britishb] 07/2/2013 08:35

Yes, an interesting one. For those daft enough to look at only P/E ratios this should well below 1 and the whole debt situation looking much more manageable.

I wonder if they'll pull it off.

I note that they've been selling pubs at 18xEDITDA. Total group EBITDA 238m suggests total estate value of 4.3b. Take off debt 2.4b? and suggests there may be 1.9b value in equity vs 100m market cap or thereabouts.

Might just be a monster multibagger. If only it was that easy!

One was simply compelled to buy some at the open just in case!

[chinese investor] 07/2/2013 08:35

Looking Good !

[scburbs] 07/2/2013 08:20

Not sure why they don't spell it out, but would this enhance NAV by £136m? This is the £229m reduction in the Punch B securitisation less the £93m spent to achieve it. This together with the relaxation of covenants and the deferral of amortisation makes this looks like a good deal if they can get it through.

[skinny] 07/2/2013 07:59

HIGHLIGHTS

Restructuring solutions identified for each securitisation

· Utilise cash resources at Group and within the Punch B securitisation to extinguish and cancel certain tranches of Punch B debt at a material discount to par; and

· Amend financial covenants and defer amortisation in the Punch A securitisation, creating a platform for future deleveraging.

Achieves a material reduction in debt and debt service

· £463 million reduction in contractual debt service payments over the next five years;

· £393 million targeted debt prepayment ahead of the new amortisation schedule over the next five years; and

· £229 million immediate reduction in debt in the Punch B securitisation.

Delivers value to all stakeholders including:

· Creates a sustainable capital structure for a highly profitable pub business which delivered £225 million of underlying operating profit and £312 million of cash generation before debt service in the last financial year;

· Provides a platform on which to execute the business plan, including a £220 million investment programme focused on the core estate and the disposal of £435 million of non-core assets; and

· Protects the material financial and operational benefits from which the two securitisations mutually benefit by being part of the wider Punch group.

Supported by a broad group of stakeholders

· A group of five financial institutions, consisting of Glenview Capital, Octavian, Luxor Capital, Alchemy and Avenue Capital, who together manage funds that hold over 50% of the Group's issued share capital, c.25% of the Punch B debt in total and a majority of the total junior debt in Punch B and the trustees of the Punch B defined benefit pension scheme;

· Monoline insurers, Ambac and MBIA who between them guarantee c.£990 million of notes across the two securitisations, including over 50% of the Punch A notes, and whose approval of the proposed restructurings is required;

· In addition, the Board has already commenced discussions with a number of other stakeholders including swap counterparties, liquidity facility providers and other holders of debt in the two securitisations; and

· Punch will now engage with all stakeholders to seek additional support to implement the proposed restructuring solutions as soon as possible, while keeping the provision of financial support to the Punch A and Punch B securitisations
under review.

[cockneyrebel] 10/1/2013 15:02

Seen the buying here today?

CR

[timbo003] 09/1/2013 14:59

Parliamentarty debate now ongoing (tune into BBC parliament, channel 81).

The big 6 will pay a levy to fund policing the code.
Cable has an open mind regarding making a free of tie option compulsory.

[cockneyrebel] 09/1/2013 13:58

Big buys - seller cleared?

CR

[cestnous] 09/1/2013 09:23

Telegraph today.

Business Secretary Vince Cable has declared war on pub companies who are "squeezing" their tenants through contracts that are "focused on short-term profit".
Large companies such as Enterprise Inns and Punch Taverns, which lease their properties to tenant landlords, have been accused by campaigners of hastening the demise of Britain's pubs by "overcharging" for drinks and rent.
It is estimated that 23,500 of Britain's 50,000 pubs are run on "tied" agreements, which can force publicans to buy beer at 50pc above market rates and pay "excessive" rents on the pubs they run.
According to the Campaign for Real Ale, more than 3,500 tied pubs have closed since 2009.
Mr Cable announced plans for an independent adjudicator with the power to fine large pub companies if they are found to be exploiting their tenants. The Department for Business, Innovation and Skills (BIS) will also consult on a statutory code to stamp out poor behaviour.
Related Articles
Enterprise shares boosted ahead of FTSE review 10 Dec 2012
Brewer Fuller's warns high taxes threatens jobs 23 Nov 2012
Leisure industry will drive economic growth: letter in full 06 Jul 2012
Pub reforms come under attack as share prices surge 24 Nov 2011
Mr Cable said: "There is some real hardship in the pubs sector, with many pubs going to the wall as publicans struggling to survive on tiny margins.
"Some of this is due to pubcos exploiting and squeezing their publicans by unfair practices and a focus on short-term profits."
BIS says it will ensure tied pubs will be "no worse off" than publicans who are on contracts that allow them to make their own decisions.
The crackdown was announced ahead of a debate in Parliament today, at which the Government was facing a potential revolt.
It was feared rebel MPs could side with Labour's shadow pubs minister, Toby Perkins, who was pressing the Coalition to stand up to "greedy" pub companies.
The beer industry already has a voluntary code of behaviour and recently introduced its own arbitration board, the PICA-Service. But campaigners say self-regulation has been "a farce".
Greg Mulholland, chair of the all-party Parliamentary Save the Pub Group, said: "The reality is that the big pubcos continue to overcharge their licensees in inflated prices and higher rents and the only way to stop this unfair business practice is for the Government to step in."
The surprise move was greeted with dismay by the pub industry, which raised concerns over how the statutory scheme would be funded. Industry figures stress it is not in their interests for their tenants to fail.
A spokesman for Punch Taverns said: "We are disappointed that self-regulation was not given time to work but will now work with others in the sector to help ensure statutory regulation is as effective as possible."
Enterprise Inns said: "We note the government's announcement and look forward to contributing to the consultation process in due course."
The British Beer & Pub Association said the industry had "made considerable progress in establishing an effective system of self-regulation."

[jonc] 08/1/2013 18:24

the troll

Dunno if this link will work for you but the average price is way below £500k.

[timbo003] 08/1/2013 17:57

CR, the only was these are going back up to 60p in the short to medium term, is with a 1 for 5 share consolidation! Forget the PUB chart, the precipitous fall was when they floated off Spirit (SPRT), so that is the chart you should really be looking at:

[the troll] 08/1/2013 17:57

c. £32/33m's worth then @ average 'book' value or c. 10% of annual cash-flow; this isn't what driving up the share price

[cockneyrebel] 08/1/2013 12:38

Been testing the 18 month high here today and a massive gap up on the chart from there.

CR

[timbo003] 06/1/2013 12:16

JonC, Wow, £440K down to £135K, that was some hair cut. Sounds like you did very well.

I cannot find the price Admiral paid Punch for my pub, as it was sold as a package. I paid Admiral £200K for mine, but with hindsight, I could probably held out for a lower price as I dont think any of the other people interested could have raised finance and I was a cash buyer.

Mine too is a wet led boozer, now with a tennant in place. I bought it with a caretaker in place, who later became the tennant, the pub was in fairly poor condition when I bought it, as a result of the previous leaseholder being on a full repairing lease (if there is a leak in a roof, he bought a bucket, rather than repair the roof as it was cheaper), I think he bought quite a bit of his beer out of tie, so it became unprofitable for Admiral, apparently the tennancy ended when he refused to let Admiral install brewline monitoring equipment. I'm currently recycling the rent into property improvements (so no tax to pay) and will carry on doing so for another year or so.

[jonc] 06/1/2013 09:46

Indeed timbo.

I bought a closed pub from Punch last year for £135k When the valuer came out for mortgage purposes he valued it at £180k which was nice.(It has now reopened under a tenancy as a solely wet lead trade and is doing well)


edit

PUB paid £440k for it in July 2007.

[timbo003] 06/1/2013 08:39

My thoughts: Cerberus have probably picked up a bargain from a distressed seller. If the numbers are to be believed, they will recover the purchase price within 8 years through earnings and then they have a free carry on the property. My experience gained from looking at old Admiral pubs (and I have looked at quite a few of them as a potential purchaser over the last few years), suggests to me that in a normal market (when finance is once again available), their pubs should be worth considerably more than £180K/pub on a bricks and mortar basis.

[robizm] 05/1/2013 19:25

You also have to add in the drinks business as well. Work out what owning say 10% of punch with no debt would be worth. Even with dilution 5% of a business with no debt able to invest and Mathew clarke. They could pay a dividend quite quickly with no debt to service.

[jeffian] 05/1/2013 18:37

But there is no "read across" to PUB and ETI because it's like trying to compare apples and pears. Generally, profitable pubs are valued (as any business) on a multiple of income. The problem at the bottom-end of a tenanted estate is that a pub tenant has to be left with a living wage or he has to give up altogether and the business closes, so there is no 'income' for the pubco to value. At that point, you fall back on to 'bricks-and-mortar' or alternative use value. Most of Admiral's estate was built from buying blocks of pubs which the bigger brewers and pubco's thought were unviable, so it's hardly surprising that they've ended up where they have.

[timbo003] 05/1/2013 16:49

I bought a pub off of Admiral in May 2011, it was a pub even Admiral didn't want! They had bought it from Punch about 6 years earlier (no idea at what price), I knocked 33% off of Admiral's initial asking price, hence my interest.

[jeffian] 05/1/2013 14:26

It's very difficult to make a comparison because they're simply not like-for-like. I was in the pubco business and Admiral were hoovering up the bottom-end pubs that the bigger pubco's didn't want.

[the troll] 05/1/2013 14:14

using balance-sheet ( GROSS ) valuations; ETI = c.£710K per house & PUB = c.£540K, a material difference indeed ( ie, from that £180K ) - seems market's applying a c.60% discount then & when measured ( crudely ) against this Admiral deal, you begin to see their point ?